Download Investment Banking PDF for free and learn How financial markets raise capital for companies, assisting in acquisition and merger. Financial Institutes provides services like market making and the trading of derivatives, foreign exchange, commodities, and stocks.
Inside this book
The term “finance” in our simple understanding is perceived as equivalent to ‘Money’. But finance exactly is not money, it is the source of providing funds for a particular activity. Providing or securing finance by itself is a distinct activity or function, which results in Financial Management, Financial Services, and Financial Institutions. Finance, therefore, represents the resources by way funds are needed for a particular activity. We thus speak of ‘finance’ only in relation to a proposed activity. Finance goes with commerce, business, banking, etc. Finance is also referred to as “Funds” or “Capital” when referring to the financial needs of a corporate body.
A financial system or financial sector functions as an intermediary and facilitates the flow of funds from the areas of surplus to the areas of deficit. A Financial System is a composition of various institutions, markets, regulations and laws, practices, money managers, analysts, transactions and claims and liabilities. The word “system”, in the term “financial system”, implies a set of complex and closely connected or interlined institutions, agents, practices, markets, transactions, claims, and liabilities in the economy.
The financial system is concerned about money, credit, and finance-the three terms are intimately related yet are somewhat different from each other. Financial System of India (or any country) consists of financial markets, financial intermediation, and financial instruments or financial products.